"Cyber is the front line of the conflict, and there is a tremendous need for solutions which secure the digital frontier," says Bob Ackerman, managing director of Allegis Capital.

The $12 million funding boost announced Thursday by PerspecSys, a McLean, Va.-based cloud-security and data protection firm, adds to the feverish pitch.

And the successful initial public offering of Palo Alto Networks fans the flames. The Silicon Valley firewall supplier went public last July at $42 per share and has been recently trading at about $50 per share, for a market capitalization of $3.5 billion.

Palo Alto recently crossed the 1,000 employee milestone and has about 11,000 customers in more than 100 countries; it had 650 employees and 7,750 customers when it went public 11 months ago. This fall the company will move into a new 300,000-plus square foot campus, triple the size of its current home.

The pattern brings to mind the wild-eyed dice-rolling on dot-com companies in the late 1990s, and the big bets placed on social media and cloud computing start-ups of every stripe from the mid-2000s forward.

But this investment wave is much different, venture capitalists say. Amazon, Google, Facebook and other successful Internet services companies emerged as big winners from previous surges, which were about innovations to spur new consumer and worker behaviors. Their successes helped change the way we live by driving valuable personal and business data into the Internet cloud.

However, the Internet's roots trace back to a military/academic experiment in anonymous, distributed communications. The Web was never intended as reliable infrastructure for secure global transactions. Pushing commerce online created a candy store for data thieves and cyberspies.

The rapid rise of the cyberunderground has, in turn, translated into a huge potential liability, spawning demand for innovative security defenses. "It's hard to imagine the stakes being much higher," Ackerman says.

By 2016, Gartner anticipates that global spending on information security systems will soar to $85 billion, up from an estimated $65.7 billion this year.

"We all have our personal information stored in different computer systems," says David Canellos, PerspecSys CEO. "Interest in securing all that information is catching up now because people see how vulnerable the systems are to theft of data."

Canellos draws the analogy of buying an expensive sports car with the best-available factory-installed alarm, then parking it overnight in a sketchy neighborhood. "Now everyone is looking at ways to improve the security system, or even build a garage around the car," Canellos says.

The problem actually is highly complex, says Ackerman. In the U.S., private industry and the federal government can't come to agreement on how best to share intelligence on attacks. Meanwhile, intellectual property is being pilfered on a vast scale, and the nation's infrastructure has been shown to be exposed to cyberattacks

If that weren't enough, individuals' privacy and safety face troubling new risks, as social media and mobile devices extend Internet commerce deeper into our daily lives. New risks also threaten businesses of all sizes, as illustrated by the recent incident of a faked Associated Press Twitter posting causing the stock market to crater, says Mark Fernandes, managing director at Sierra Ventures.

"The cybersecurity battle is being fought on multiple fronts," Fernandes says. "A new threat vector is emerging in social media, where the security bar is considerably lower. The financial-gain side of social media hacks is probably just starting."

At the start of this century, criminal hackers were mostly naive and ego-driven, Kramer says. Today, they are laser-focused on scams to efficiently churn quick criminal profits and on stealing data or wreaking havoc to meet political and military agendas, he says.

"Security is horizontal; it covers all IT infrastructure. The result is that the security industry is much more fragmented, with many more start-ups than other industries," Kramer observes. "Another thing is that the bad guys continually innovate. So there is a greater need for constant innovation on the security side, and, hence, much more need for investment capital."